For most High Net Worth Individuals (HNWIs), the traditional approach to managing one's wealth was to discuss their needs with their private banker who would in turn concentrate their investments on the market he or she knows best; their domestic market. As a consequence, this overexposed their investment portfolio to just one market and they suffered when this market experienced turmoil. This also meant that their investment decisions were dependent on the frequency of their exchanges with their private banker. Today though, the investment opportunities are global and to seize them, one must be able to get the information and take a decision in a very short period of time. Plus, in a zero interest rate environment, many investors are willing to take some leverage in their portfolio, which even adds up in terms of risk to the previous one. This is why here at SociÉtÉ GÉnÉrale, we're implementing a new approach to complementing the private banker service. It gives access to a portfolio and market specialist who advises the client in real time on market opportunities while monitoring the portfolio in terms of risk and diversification of the asset classes and geographical exposure. If the client wants to follow this advice, the specialist is also able to transmit the client order to the execution desk. This is done within the legal framework of a mandate of Managed Advisory Service. The main novelty here is that this kind of support from banks was previously enjoyed by big financial institutions like Sovereign Wealth Funds or Pensions Funds. Now, we aim at providing our private clients with the same professional support on their portfolios. BOLSTERING SUPPORT How does this service help HNWIs better manage their wealth? First of all, it gives access to a very experienced market professional who will be entirely dedicated to the follow-up of the clients' portfolios without any commercial activity in parallel. This means that this specialist is very available and can answer all client requests for advice in a short period of time. Because it is an advisory and not a discretionary activity, these clients will also be able to discuss investment opportunities and thus, increase their knowledge of the investment solutions range to manage their wealth. They will retain control on the big decisions that structure their investment portfolio and they will also have a better assessment of the potential risk that might impact negatively the performance of their investments. In other words, we are upgrading the support to the HNWI, helping them to access the same range of research and portfolio techniques than institutional clients. DIFFERENT PERSPECTIVE In terms of positioning, the Managed Advisory service is located between Classic Advisory (clients exchange views with their Private Bankers on portfolio and market opportunities) and Discretionary Portfolio Management (clients delegate all the decisions linked to their portfolio). We understood that some of our clients wanted to have a very high quality of follow-up of their portfolios but at the same time they did not want to fully delegate the management of their assets to a discretionary portfolio manager. We believe that, as talented as they may be, private bankers cannot be specialists on all the asset classes, and definitely cannot continuously monitor the markets while continue their commercial activity at the same time, which implies travels and clients meetings. This is why the launch of this activity, earlier this year, was a great success among our wealthiest clients. Indeed, they saw instantly the difference, being able to access one market specialist, who already knew their portfolio, who understood their objectives and still was able to advise on the risk taken for each investment. This specialist is in direct contact with all our global research teams specialised in a wide range of markets and financial instruments. He or she can thus provide his clients with advices on tactical positions to benefit from short term and long-term market trends. SociÉtÉ GÉnÉrale Private Banking & Corporate Investment Banking DIFC, The Gate Village , Building 6, Floor 4 PO Box 506642, Dubai, UAE Tel. + 971 (0)4 4257 641 www.socgen.com SociÉtÉ GÉnÉrale was winner of Best Private Bank - Banker Middle East Industry Awards 2012 2014 OUTLOOK AND ADVICE SociÉtÉ GÉnÉrale Chief Investment Officer Philippe Boutron gives his view on where you should be putting your money in 2014... "Global activity indicators point to further expansion; it bodes well for 2014 where growth is expected around three per cent after two per cent in 2013. "In the US, the Euro zone, Japan , the UK and even China , all business surveys are consistent with improving economic momentum, while it was also noted that good figures were less surprising than a month ago. The ' Washington melodrama' surely did not help private sector confidence in October. The big picture is nevertheless sound: global growth has rebounded, global trade is revived, the Euro zone crisis has abated and China did not hard land. Most economies are still far from full potential so inflation is still non-existent, with no threat from energy prices amid dissipating geopolitical risks. Major central banks keep full flexibility to maintain easy policies with growth supportive interest rate levels. "Conditions are therefore ideal for improvements in the corporate sector, which is crucial at a time when the public sector will engage in spending reduction in most economies (except in Japan ). Profit margins are high (US) or recovering (Euro zone, Japan ), and financing cost is low with improving lending conditions (especially in the Euro zone). So far, global capital spending has been dormant, hitting zero per cent growth over a year, but going forward this is likely to rebound, pulling growth with it in 2014. Should firms disappoint on increasing capital spending, we would be concerned on the persistence of this growth cycle. "Against a backdrop of steady liquidity injections by central banks, and global growth consolidating across regions, we expect risky assets to continue to do well. "This is supportive for equity markets but we still prefer Developed Markets; US markets in particular because abundant liquidity and a cheap cost of debt financing are not threatened, enabling firms to further improve their return on equity. "For Emerging Market equities, we do not see across-the-board upside after the recent rebound. Decelerating growth in China , the need for structural reforms, policy mismanagement and capital outflows remain negative drivers for these markets in general, though opportunities still exist at more granular level (countries, industries, etc.). "Among sectors/styles, we tend to prefer cyclicals in the US, such as financials, tech, and capital goods sectors. Indeed, companies remain on track to boost business investment. In Europe , we prefer to avoid stocks exposed to slowing growth in emerging markets as recent earnings results highlight the risk of major disappointments; also considering the dear valuation of some sectors (i.e. luxury goods and staples). We therefore keep our preference for value sectors, such as Energy and Financials. Among Emerging Markets, we continue to like resilient growth and consumer related stocks, avoiding capex related and cyclical sectors as the Emerging Market economic environment is still lacklustre." SociÉtÉ GÉnÉrale Chief Investment Officer Philippe Boutron .
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